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Washington DC Housing Market 1Q 2Q 2009
Home prices climbed in the Washington region and most parts of the country in recent months, another sign that the housing market is slowly stabilizing, according to two reports released Tuesday.
The closely watched Standard & Poor's/Case-Shiller index shows that prices of previously owned single-family homes in this area rose 2.85 percent in June compared with the previous month. The monthly gain is the second in a row in the region, topping the 1.3 percent increase in May. It is the largest jump since May 2006, when prices peaked.
Another index, compiled by the Federal Housing Finance Agency, shows that the area's seasonally adjusted prices rose 4 percent from the first quarter to the second quarter, whereas prices fell 0.7 percent nationally.
Even so, prices remain much lower than they were at the same time last year, locally and nationally. But the reports, which track repeat sales of a home, bolster more recent positive trends reflected in other national housing market indicators. Home sales, construction activity and builder confidence have all risen in the past few months.
"It's noteworthy that all indicators are pointing in the same direction," said Mike Larson, a housing analyst at Weiss Research. "But it's not 'Happy days are here again.' We're going to see continued deterioration, but at a slower pace."
Nationally, prices rose 2.9 percent in the second quarter from the previous quarter -- the first such gain in more than two years, according to the S&P/Case-Shiller report, which measured prices in all nine U.S. census divisions. If seasonally adjusted, they were up 1.4 percent.
The report also broke out numbers for the nation's major metropolitan areas, including a 20-city index. That index showed that prices rose 1.4 percent from May to June. If seasonally adjusted, they rose 0.7 percent, with prices up in every region except five. The steepest drop was in Las Vegas.
The federal index showed a slightly more modest 0.5 percent seasonally adjusted month-to-month gain in June after a revised increase of 0.6 percent in May. It also concluded that prices rose in five of the nine U.S. census divisions from May to June. But unlike the S&P/Case-Shiller index, it showed a price drop from the first to second quarters -- 0.7 percent.
The difference may be related to the fact that each index measures a different universe of home purchases. The federal index reflects sales of homes financed by mortgages that meet the guidelines of the mortgage financiers Fannie Mae and Freddie Mac. The S&P/Case-Shiller index captures all types of home sales, including those financed by subprime or government-backed loans. Both indexes show that pricing improved in recent months and it could be that the S&P/Case Shiller index reflected more recent sales transactions, which could explain why their sales are up quarter over quarter.
Housing experts are more interested in the monthly numbers anyway. They are looking for signs of a turnaround, and comparisons to previous quarters or previous years are not as helpful to them on that front.
Nationally, second quarter prices fell nearly 15 percent from the same period a year ago, according to the Case-Shiller numbers. The federal index shows them falling 6.1 percent in the first half of the year, compared with a year ago.
"The year-over-year numbers obscure what's really happening because most of the declines we're seeing in those numbers happened in the end of 2008 and the first three months of 2009," said Patrick Newport, an economist at IHS Global Insight. "We've seen dramatic turns in the numbers since then."
Still, both reports warn that despite price improvements, the housing market remains anemic and some parts of the country are more devastated than others. The sharpest price drops have been in areas where prices once soared. "Some of the hardest-hit cities, especially in the Sun Belt, show continued weakness," David M. Blitzer, chairman of the S&P index committee, said in a statement.
Putting pressure on prices is the oversupply of homes in the market and the number of foreclosures and other distressed properties. Those forces will continue to plague the market for several more quarters, analysts said.
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